NOTE: Where it is feasible, a
syllabus (headnote) will be released, as is being done in
connection with this case, at the time the opinion is
issued.The syllabus constitutes no part of the opinion of
the Court but has been prepared by the Reporter of Decisions
for the convenience of the reader.See United States
v. Detroit Timber & Lumber Co., 200 U.S. 321,
337.

SUPREME COURT OF THE UNITED
STATES

TENNESSEE STUDENT ASSISTANCE CORPORATION
v. HOOD

CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SIXTH CIRCUIT

No. 021606. Argued March 1, 2004Decided May 17,
2004

Respondent Hood had an outstanding balance on
student loans guaranteed by petitioner Tennessee Student
Assistance Corporation (TSAC), a state entity, at the time she
filed a Chapter 7 bankruptcy petition. Hoods general
discharge did not cover her student loans, as she did not list
them and they are only dischargeable if a bankruptcy court
determines that excepting the debt from the order would be an
undue hardship on the debtor, 11 U.S.C. §
523(a)(8). Hood subsequently reopened the petition,
seeking an undue hardship determination. As
prescribed by Federal Rules of Bankruptcy Procedure 7001(6),
7003, and 7004, she filed a complaint and, later, an amended
complaint, and served them with a summons on TSAC and others.
The Bankruptcy Court denied TSACs motion to dismiss the
complaint for lack of jurisdiction, holding that 11 U.S.C. §
106(a) abrogated the States Eleventh Amendment
sovereign immunity. The Sixth Circuit Bankruptcy Appellate
Panel affirmed, as did the Sixth Circuit, which held that the
Bankruptcy Clause gave Congress the authority to abrogate state
sovereign immunity in §106(a). This Court granted
certiorari to determine whether the Bankruptcy Clause grants
Congress such authority.

Held: Because the Bankruptcy
Courts discharge of a student loan debt does not
implicate a States Eleventh Amendment
immunity, this Court does not reach the question on which
certiorari was granted. Pp. 413.

(a) States may
be bound by some judicial actions without their consent. For
example, the Eleventh Amendment
does not bar federal jurisdiction over in rem admiralty
actions when the State does not possess the res.
California v. Deep Sea Research, Inc.,523 U.S. 491,
507508. A debts discharge by a bankruptcy
court is similarly an in rem proceeding. The court has
exclusive jurisdiction over a debtors property, wherever
located, and over the estate. Once debts are discharged, a
creditor who did not submit a proof of claim will be unable to
collect on his unsecured loans. A bankruptcy court is able to
provide the debtor a fresh start, even if all of his creditors
do not participate, because the courts jurisdiction is
premised on the debtor and his estate, not on the creditors.
Because the courts jurisdiction is premised on the res,
however, a nonparticipating creditor cannot be personally
liable. States, whether or not they choose to participate in
the proceeding, are bound by a bankruptcy courts
discharge order no less than other creditors, see, e.g.,New York v. Irving Trust Co.,288 U.S. 329, 333.
And when the bankruptcy courts jurisdiction over the res
is unquestioned, the exercise of its in rem jurisdiction
to discharge the debt does not infringe a States
sovereignty. TSAC argues, however, that the individualized
process by which student loan debts are discharged
unconstitutionally infringes its sovereignty. If a debtor does
not affirmatively secure §523(a)(8)s undue
hardship determination, States choosing not to submit
themselves to the courts jurisdiction might receive some
benefit: The debtors personal liability on the loan may
survive the discharge. TSAC misunderstands the
proceedings fundamental nature when it claims that
Congress, by making a student loan debt presumptively
nondischargeable and singling it out for an individualized
determination, has authorized a suit against a State. The
bankruptcy courts jurisdiction is premised on the res,
not the persona; that States were granted the presumptive
benefit of nondischargeability does not alter the courts
underlying authority. A debtor does not seek damages or
affirmative relief from a State or subject an unwilling State
to a coercive judicial process by seeking to discharge his
debts. Indeed, this Court has endorsed individual
determinations of States interests within the federal
courts in rem jurisdiction, e.g., Deep Sea
Research, supra. Although bankruptcy and admiralty are
specialized areas of the law, there is no reason why the
exercise of federal courts in rem bankruptcy
jurisdiction is more threatening to state sovereignty than the
exercise of their in rem admiralty jurisdiction. Pp.
49.

(b) With
regard to the procedure used in this case, the Bankruptcy Rules
require a debtor to file an adversary proceeding against the
State to discharge student loan debts. While this is part of
the original bankruptcy case and within the bankruptcy
courts in rem jurisdiction, it requires the
service of a summons and a complaint, see Rules 7001(6), 7003,
and 7004. The issuance of process is normally an indignity to
a States sovereignty, because its purpose is to establish
personal jurisdiction; but the courts in rem
jurisdiction allows it to adjudicate the debtors
discharge claim without in personam jurisdiction over
the State. Section 523(a)(8) does not require a summons, and
absent Rule 7001(6) a debtor could proceed by motion, which
would raise no constitutional concern. There is no reason why
service of a summons, which in this case is indistinguishable
in practical effect from a motion, should be given dispositive
weight. Dismissal of the complaint is not appropriate here
where the court has in rem jurisdiction and has not
attempted to adjudicate any claims outside of that
jurisdiction. This case is unlike an adversary proceeding by a
bankruptcy trustee seeking to recover property in the
States hands on the grounds that the transfer was a
voidable preference. Even if this Court were to hold that
Congress lacked the ability to abrogate state sovereign
immunity under the Bankruptcy Clause, the Bankruptcy Court
would still have authority to make the undue hardship
determination Hood seeks. Thus, this Court declines to decide
whether a bankruptcy courts exercise of personal
jurisdiction over a State would be valid under the Eleventh Amendment.
If the Bankruptcy Court on remand exceeds its in rem
jurisdiction, TSAC would be free to challenge the courts
authority. Pp. 1013.